No.   1417. 

IN  THE 

UNITED  STATES  CIRCUIT  COURT  OF  APPEALS, 

FOR  THE  SEVENTH  CIRCUIT, 
OCTOBER  TERM,   A.   D.    1907. 


NELSON  THOMASSON,  Jr.,  et  al., 

Appellants,' 

In  Equity. 

CHICAGO  RAILWAYS  COMPANY, 

Appellee. 

Before  MR.  JUSTICE  BREWER,  JUDGES  BAKER  and  SEAMAN. 


Argument  of  Charles   H.  Aldrich,  E*sq.,   in 
opposition  to  the  petition  of  the  Chicago 
Railways  Company. 

BARNARD  &  MILLBR,  PRINTER*,  CHICAGO 


THURSDAY,  September  5,  1907. 
ARGUMENT  BY  MR.  ALDRICH. 


May  it  please  the  Court,  I  do  not  appear  here  to  dis- 
cuss at  all  the  fairness  or  unfairness  of  the  proposed 
plan  of  reorganization,  as  applied  to  the  different  inter- 
ests, in  so  far  as  they  are  represented  in  the  several  com- 
panies that  are  now  to  be  merged  or  extinguished  in 
the  Chicago  Railways  Company.  I  want  briefly  to  call 
your  attention  to  facts  which  are  a  part  of  the  history 
of  this  litigation,  with  a  view  of  seeing  whether  there 
is  any  such  extraordinary  necessity  for  the  court  to 
depart  from  all  precedents  heretofore  made;  in  fact, 
overturn  all  precedents  that  have  heretofore  been  made, 
to  meet  what  I  shall  urge  upon  this  court  to  be  only  an 
imaginary  necessity.  Such  necessity  does  not,  in  fact, 
exist 

You  have  been  told  that  this  creditors'  suit  was  insti- 
tuted in  April,  1903;  that  was  a  suit  based  first  upon 
judgments  against  three  separate  companies,  the 
Union  Traction  Company,  the  West  Chicago  Street  Rail- 
road Company,  and  the  North  Chicago  Street  Railroad 
Company.  Just  prior  to  the  institution  of  this  suit,  these 
notes  evidencing  the  indebtedness  which  was  merged  in 
this  judgment,  had  been  issued.  It  is  undisputed  in  this 
record,  that  the  indebtedness  at  that  time  and  for  the 
purposes  of  a  suit  to  put  this  property  into  the  custod^ 
of  the  court,  was  an  indebtedness  of  the  Union  Traction 
Company.  There  will  be  no  controversy  about  that  sub- 
ject. 

By  the  terms  of  the  lease  between  the  street  railroad 


companies  and  the  Union  Traction  it  was  incumbent 
upon  the  Union  Traction  Company,  which  I  will  call 
the  Traction  Company  hereafter,  to  pay  all  of  the  float- 
ing indebtedness  of  the  underlying  or  lessor  com- 
panies; and  in  accordance  with  that  covenant,  after 
it  entered  into  possession,  it  did  pay  all  of  the  floating 
indebtedness  of  these  companies,  and  then  after  run- 
ning these  properties  which  had  been,  prior  to  that  time, 
separate  properties,  under  separate  management,  occu- 
pying the  natural  divisions  of  the  city,  the  North  and 
West  sides  of  the  city,  it,  for  the  purposes  of  this  liti- 
gation, reissued  these  notes  in  the  name  of  the  underly- 
ing companies  which  it  controlled  by  its  dummies. 

By  the  terms  of  the  lease  the  Union  Traction  was 
to  maintain  the  organization  of  the  street  railroad 
companies  at  an  expense  to  itself  not  exceeding  $3,000 
a  year.  It  therefore  had  the  official  control  of  the  un- 
derlying companies,  and  by  its  representatives  was  man- 
aging the  underlying  companies.  It  put  up  32,000  shares 
of  West  Chicago  Street  stock  and  20,000  of  North  Chi- 
cago Street  stock,  to  secure  the  performance  of  its 
covenants.  Of  course,  when  it  allowed  a  judgment  to 
be  taken  against  its  lessor,  the  West  Chicago  Street 
Eailway  or  its  other  lessor,  the  North  Chicago  Street, 
it  broke  the  covenants  of  its  lease,  and  when  receivers 
were  appointed  in  this  case,  and  there  were  three  differ- 
ent sets  of  receivers,  the  possession  that  was  taken  under 
order  of  the  court  was  simply  of  the  interest  of  those 
companies  in  having  the  Union  Traction  lease  carried 
out  or  forfeited. 

Now  as  to  the  interest  of  the  Union  Traction  Com- 
pany, let  me  touch  upon  that  just  for  a  moment.  It  had 
forfeited  its  lease,  and  the  court  could  have  solved  this 


difficulty  that  it  says  it  has  labored  so  hard  for  four 
years  to  solve,  and  ends  by  giving  the  property  over  to 
a  corporation  that  has  not  a  dollar  of  paid  u^>  capital, 
and  is  going  to  have  it  paid  with  the  proceeds  of  our 
property,  by  simply  selling  the  collateral  that  the  Union 
Traction  Company  had  up  to  secure  its  defaulted  cove- 
nants. That  collateral  at  that  time  in  the  market  was 
worth  upwards  of  eighty  dollars  a  share,  and  would  have 
paid  every  dollar  of  this  reissued  or  floating  debt,  in- 
cluding the  judgment,  and  would  also  have  made  im- 
provements that  exceed  in  amount  those  made  under  this 
receivership.  After  paying  this  debt  there  would  have 
been  no  longer  any  reason  for  a  receivership  of  the 
West  Chicago  Street  Railroad  Company;  it  could  have 
resumed  the  control  and  direction  of  its  own  affairs  and 
taken  up  with  the  city  itself  the  settlement  of  these  po- 
litical or  legislative  questions  which  have  so  exercised 
the  court  during  these  four  years. 

'We  would  not  now  have  had  any  street  railroad  situa- 
tion if  the  defaulted  covenants  of  the  Union  Traction 
Company  had  been  enforced  and  the  collateral,  the  se- 
curity which  had  been  put  up  to  secure  those  covenants, 
had  been  sold. 

Now  what  was  done?  Gentlemen,  in  the  interests  of 
the  Union  Traction  Company  were  appointed  receivers. 
The  same  gentleman  who  had  been  counsel  of  the  Union 
Traction  Company  became  the  counsel  of  the  receivers. 
Up  to  that  time,  what  was  the  condition  of  the  les- 
sor companies!  I  am  speaking  now  simply  of  the  West 
Chicago  Street. 

The  West  Chicago  Street  up  to  that  time  had  paid 
dividends  of  never  less  than  six  per  cent,  from  the  time 
of  its  organization,  and  in  some  instances  higher  than 


6 

that,  from  its  earnings ;  and  since  the  institution  of  this 
receivership  it  has  always  had  an  income  in  excess  of 
the  discharge  of  all  of  its  liabilities,  and  I  include  in 
those  liabilities  the  thirty-five  per  cent,  that  it  had  to 
pay  to  its  lessor,  the  [West  Division,  the  discharge  of  all 
interest  upon  its  mortgage  debts,  the  taxes,  etc. 

JUSTICE  BREWER:     I  think  perhaps  it  would  expe- 
dite matters  and  would  be  a  little  bit  more  satisfac- 
tory to  me  if  we  adjourn  now  until  tomorrow. 
Mr.  ALDRICH:     All  right. 

Whereupon  an  adjournment  was  taken  until  Friday, 
September  6,  1907,  at  10  o'clock  A.  M. 


10  A.  MV  FRIDAY,  September  6,  1907. 
Court  met  pursuant  to  adjournment. 

Whereupon  Mr.  Charles  H.  Aldrich  continued  his  ar- 
gument as  follows: 

May  it  please  your  Honors,  at  the  hour  of  adjourn- 
ment last  night  I  had  pointed  out  that  the  Union  Trac- 
tion interests  in  the  West  Chicago  Street  Railroad  Com- 
pany and  the  North  Chicago  Street  Railroad  Company 
are  purely  those  of  a  tenant,  and  that  prior  to  the  time 
of  the  execution  of  that  lease  the  West  Chicago  Street 
Railroad  Company  had  always  paid  dividends  and  dis- 
charged all  of  its  obligations.  I  wish  to  add  that  when 
the  West  Chicago  Street  Railroad  Company  came  into 
the  field,  in  1886  or  1887,  it  found  a  horse  railway  on 
the  West  Side  and  97  and  a  fraction  miles  of  track.  Dur- 
ing the  ten  or  twelve  years,  between  the  time  when  it 
commenced  operations  and  executed  the  lease  to  the 
Union  Traction  Company,  it  had  more  than  doubled  the 
mileage  existing  on  the  West  Side,  to  say  nothing  of  the 


Consolidated,  the  lines  in  black  (referring  to  map), 
which  had  been  constructed  really  with  the  money  of  the 
stockholders  and  with  the  credit  of  the  West  Chicago 
Street  Railroad  Company  and  the  North  Chicago 
Street  Railroad  Company,  and  the  systems  had 
been  changed  from  horse  railroads  to  cable  and 
electric  railroads  during  this  period.  So  that  dur- 
ing this  twelve-year  period  the  West  Chicago  Street 
Railroad  Company  had  not  alone  been  paying  dividends 
to  its  stockholders  and  paying  its  creditors,  but  it  had 
been  extending  its  lines — I  do  not  say  commensurate, 
perhaps,  with  the  growth  of  the  city,  but  as  rapidly,  per- 
haps, as  they  could  be  extended. 

In  1899  this  lease  was  first  made  to  the  Union  Trac- 
tion Company,  and  it  went  into  occupation  of  the  prem- 
ises. There  had  been  no  attempt  at  a  unified  system 
prior  to  that  time,  and  the  unification  of  the  system,  of 
which  so  much  is  made,  consists  of  nothing  except  that 
the  cars  were  routed  over  the  tracks  of  the  several  com- 
panies irrespective  of  the  ownership  of  those  tracks,  in 
some  few  instances. 

Justice  BREWER:  Was  there  not  a  common  man- 
agement? 

Mr.  ALDRICH  :  There  was  a  common  management 
but  the  corporate  existence  of  the  other  companies 
was  maintained,  and  separate  books  of  account  were 
kept ;  there  were  separate  officers,  etc.  In  some  re- 
spects the  management  and  the  legal  departments 
were  the  same;  in  other  respects  they  were  not  the 
same. 

The  Union  Traction  Company  itself  paid  dividends. 
In  April,  1903,  when  this  receivership  was  inaugu- 
rated, it  was  nothing  but  a  tenant  and  it  had  abun- 
dant collateral  to  discharge  its  covenants  on  the  de- 
fault which  it  made  when  it  issued  these  notes  and  al- 


8 

lowed  tliis  judgment  to  be  taken  against  the  West 
Chicago  Street  Railroad  Company.  In  an  answer  filed 
by  the  Illinois  Trust  &  Savings  Bank,  in  response  to 
the  demand  to  issue  receivers'  certificates,  which  should 
be  put  ahead  of  the  mortgage  indebtedness,  the  bank  set 
out  what  we  have  set  out  in  our  petition,  that  the  West 
Chicago  Street  Railroad  Company  was  a  solvent  con- 
cern, able  to  discharge  its  obligations  not  only  to  its 
creditors  but  to  the  public,  and  that  all  it  needed  was  the 
management  of  its  own  affairs.  In  view  of  the  fact  that 
these  properties  are  to  be  permanently  taken  not  only 
from  the  creditors  of  the  W'est  Chicago  but  from  the 
stockholders  and  in  a  manner  not  in  accordance  with 
the  contracts  with  the  City — for  the  valuation  is  not 
made  at  all  in  accordance  with  terms  prescribed  by  those 
ordinances  upon  which  the  system  was  established. 

Justice  BREWER:  These  defendants  are  trustees 
and  stockholders'? 

Mr.  ALDRICH:  Yes,  there  are  stockholders  who 
are  trustees ;  and  in  this  little  sheet  that  was  handed 
you  yesterday  purporting  to  set  out  the  ownership 
of  this  Protective  Committee,  and  in  the  publications 
made,  to  the  effect  that  they  only  represent  a  few 
shares,  I  wish  to  say  to  the  court  that  they  repre- 
sent, as  they  set  forth  in  their  petition,  about  $300,- 
000  of  the  capital  stock  of  the  company,  and  that 
they  are  in  a  position  to  do  more  than  the  Chicago 
Railways  Company  is  in  position  to  do  or  has  offered 
to  do.  It  has  not  put  up  any  money  whatever  ex- 
cept what  the  court  proposes  to  give  them  to  put  up. 
It  is  seeking  to  take  these  properties  without  credit 
and  without  money,  while  this  Protective  Committee 
is  ready  and  willing  to  pay  the  floating  debt  of  the 
West  Chicago  Street  Railroad  Company  and  the 
judgment  by  which  the  West  Chicago  Street  Rail- 
road Company  is  in  the  hands  of  the  receivers. 

In  other  words,  our  properties  are  to  be  destroyed  or 
given  away.     They  give  us  nothing  for  it,  because  we 


9 

have  not  deposited  our  stock,  and  if  you  will  examine 
this  agreement  you  will  see  that  we  are  not  permitted 
to  share  in  this  property  at  all  as  a  penalty  for  not  de- 
positing our  stock;  so  that  our  property,  because  of  the 
exercise  of  our  judgment,  is  taken  away  from  us  if  this 
plan  is  carried  through,  without  judicial  sale,  and  with- 
out any  decree  from  which  we  may  appeal,  unless  this 
be  denominated  a  decree,  and  under  circumstances  which 
I  will  not  describe  and  for  the  obligations  of  a  company 
which  has  refused  to  discharge  and  failed  to  discharge 
its  obligations  to  us.  The  32,000  shares  of  stock  which 
were  deposited  as  collateral  to  the  promises  of  that  com- 
pany are  wiped  out,  that  security  is  taken  from  us ;  you 
will  find  in  this  plan  that  the  collateral  has  been  taken 
away,  and  I  am  advised  by  a  person  who  ought  to  know, 
although  I  am  unable  to  state  the  fact  positively,  that 
in  the  stock  deposited  to  carry  the  plan  the  32.000  shares, 
which  is  our  collateral,  has  been  deposited  under  orders 
of  the  court. 

Mr.  GURLEY:     That  is  not  correct. 

Mr.  ALDEJCH  :  I  am  glad  to  hear  if  it  is  not  correct. 
There  was  another  fund  to  which  the  West  Chicago 
Street  Railroad  Company  would  have  had  a  right  to 
look  had  it  been  permitted  to  resume  the  charge  of 
its  own  affairs  upon  the  payment  of  this  debt  by  the 
sale  of  this  collateral  for  the  defaults  on  the  part  of 
the  Union  Traction  Company.  The  Union  Traction 
Company  was  organized  with  twelve  million  pre- 
ferred stock  and  twenty  million  common  stock.  The 
record  in  this  case  shows  that  the  common  stock  was 
never  paid  for  in  any  way ;  that  50  per  cent,  of  com- 
mon stock  was  given  with  the  preferred  stock  to  the 
subscribers  of  that  and  the  balance  of  common  stock 
was  given  away.  That  unpaid  subscription,  which 
is  wiped  out  by  this  plan,  if  it  is  carried  out,  con- 
stituted a  fund  to  which  these  stockholders  and  the 
corporation  which  was  in  control  of  these  adverse 
interests  had  a  right  to  look  for  the  discharge  of  the 
defaulted  covenants  of  this  tenant. 


10 

One  of  the  earliest  things  done  in  this  receivership — 
and  I  will  only  speak  by  the  record,  if  the  court  please — 
was  to  practically  force  an  amendment  to  the  contract 
relations  which  had  existed  between  the  West  Chicago 
Street  and  the  Union  Traction  Company.  That  action 
on  the  part  of  the  court  came  to  this  court— one  phase 
of  it — for  review,  in  a  case  reported  in  the  130th  Fed- 
eral, and  this  court  held  that  the  court  of  administration 
had  charge  of  the  property  simply  for  one  piirpose, 
namely,  to  realize  the  amount  of  the  indebtedness,  with 
due  regard  to  the  rights  of  the  public ;  it  was  not  a  part 
of  the  functions  of  the  court  to  make  an  enlargement 
of  the  lease  by  which  the  Union  Traction  Company's 
rights  were  extended  from  99  years  to  999  years  and  the 
rental  reduced.  That  was  done  by  the  aid  of  our  collat- 
eral that  was  in  the  hands  of  a  trustee  and  its  vote,  and 
the  stockholders  at  that  time  were  assured,  they  had  all 
the  assurances  that  a  court  could  give  them,  that  if  they 
submitted  to  the  deductions  in  rental  made  by  the  terms 
of  that  amended  lease,  of  July  24,  1903,  such  reductions 
would  rehabilitate  the  property,  and  would  enable  them 
to  earn  dividends;  by  the  terms  of  the  lease  they  were 
to  participate  in  the  net  earnings  prior  to  1908,  but  after 
that  time  they  were  to  have  a  guaranteed  return  again 
upon  their  stock  investment.  In  addition  to  that,  you 
will  see  by  the  third  article  of  that  amended  lease  that 
it  was  provided  that  the  new  franchises,  when  they  were 
got,  should  be  negotiated  for  the  benefit  of  the  lessor 
companies.  You  are  told  much  in  the  brief — you  will  be 
told  in  the  argument  much  about  the  supineness  of  these 
stockholders  and  bondholders  who  have  sat  by  and  paid 
no  attention  to  the  action  of  these  men  who  were  direc- 
tors of  our  corporation,  of  these  men  who  were  mana,- 
ging  it  in  the  interest  of  the  Union  Traction  Company, 


11 

as  we  contend,  and  who  have  made  the  situation  which 
now  exists ;  I  ask,  did  we  not  have  a  right  to  rely  upon 
the  fact  that  they  were  our  representatives? 

By  the  amended  lease,  in  which  we  had  sacrificed  our 
rights,  we  were  assured  that  any  new  ordinance  which 
was  obtained  should  be  for  the  benefit  of  our  companies. 
We  supposed  they  were  our  representatives;  that  they 
were  working  for  us  and  for  all  equally  and  not  for 
themselves ;  and  we  had  no  advice  to  the  contrary  until 
we  discovered  the  contract  of  May  25,  1906.  I  want  to 
call  attention  to  two  provisions  of  that  contract. 

Justice  BREWER:     What  was  that  in? 

Mr.  ALDRICH  :  In  the  intervening  petition  of  the 
Protective  Committee,  which  is  referred  to  in  our 
answer  and  should  be  a  part  of  this  record.  It  has 
not  been  printed.  It  is  also  referred  to  in  the  testi- 
mony. I  only  want  to  read  two  clauses  of  this  con- 
tract and  then  I  want  to  ask  the  court  by  whom  it 
was  made  and  who  were  the  parties  who  were  deal- 
ing with  this  property  and  what  duties  they  owed 
to  the  property  under  the  circumstances,  and  to  us. 

The  twelfth  provision  of  that  contract  is  ( i  No  step 
taken  hereunder  or  ordinance  granted  to  the  new 
company  or  contract  or  arrangement  made  by  said 
new  company  shall  inure  to  the  advantage  of  the 
leases  and  agreements  between  the  North  and  the 
West  Companies,  respectively,  and  the  Union  Trac- 
tion Company,  or  of  the  Union  Traction  Company 
or  of  the  North  Company  or  of  the  West  Company, 
or  of  any  lessor  company  of  said  North  or  West 
Company,  or  of  any  subsidiary,  controlled  or  leased 
company  of  any  of  said  corporations." 

Judge  BAKER:     What  contract  is  this? 

Mr.  ALDRICH:  The  contract  signed  by  our  trus- 
tees, directors  of  our  company,  four  of  them ;  signed 
also  by  attorneys  who  represented  us  and  by  these 
gentlemen  who  have  prepared  these  plans  and  some 
of  the  receivers  of  the  court  below. 

Judge  BAKER:     Was  that  the  inception  of  it? 


12 

Mr.  ALDEICH  :  It  was  the  inception  of  the  Chi- 
cago Railways  Company. 

Mr.  GTURLEY  :  It  will  be  found  in  Volume  7,  page 
554. 

Mr.  ALDEICH:  The  16th  clause  of  this  contract  says, 
"Nothing  in  this  agreement  contained  shall  be  taken  as 
a  recognition  that  any  person  or  corporation  has  any 
interest  in  or  is  or  shall  be  entitled  to  any  allotment  of 
stock  or  other  securities  or  other  compensation  by  rea- 
son of  any  interest  in  any  of  the  properties  above  re- 
ferred to." 

There  are  other  provisions  of  the  same  character  in 
this  contract.  This  contract  looks  to  the  acquisition  of 
all  of  these  properties  by  a  new  company  that  is  to  be 
organized  by  these  men  who,  by  law  and,  as  I  contend, 
by  every  principle  of  equity,  were  our  trustees ;  who 
were  paid  by  our  money  during  all  this  period;  the  net 
earnings  of  our  company  August  31,  1906,  were  over 
$864,000  over  and  above  all  of  the  obligations  to  our 
landlords  and  to  our  creditors  and  they  exceeded  that 
sum  lor  the  fiscal  year  ending  August  31,  1907.  They 
entered  into  a  contract  to  form  a  new  company  and 
absolve  themselves  from  the  obligations  growing  out  of 
their  personal  relations  to  the  West  Chicago  Company, 
and  the  Chicago  Railways  Company  was  born  in  pursu- 
ance to  that  contract. 

We  filed  an  intervening  petition  for  this  Protective 
Committee  setting  out  this  contract,  which  was  the  first 
signal  of  warning  that  we  had.  We  had  supposed,  in 
accordance  with  the  amended  lease,  to  which  I  have  re- 
ferred, that  these  men  were  working  for  us;  that  the 
ordinances  were  to  be  taken,  if  there  were  any  new  ordi- 
nances, in  the  names  of  our  companies,  the  landlords, 
and  the  third  clause  of  the  amended  lease  said  that  when 
so  taken  they  should  be  subject  to  the  lease  during  the 


13 

full  term  thereof.  Under  these  circumstances — and  when 
we  got  information  of  that  contract  we  tendered  a  peti- 
tion to  the  court  asking  that  this  committee  be  allowed 
to  become  a  party  to  the  litigation.  We  did  not  know,  if 
the  court  please,  that  the  court  of  administration  was  a 
party  to  this  contract;  we  had  no  advices  of  that  kind. 
We  assumed  that  while  these  gentlemen,  constituting  a 
majority  of  the  board  of  directors  of  the  corporation  in 
which  we  had  stock,  had  contracted  in  this  way,  that  the 
court  itself  was  not  a  party  to  that  contract;  we  ten- 
dered to  the  court  information  concerning  this  contract 
and  we  set  up  that  it  was  time  for  a  protective  commit- 
tee to  be  allowed  to  come  in  and  intervene  in  this  case 
in  order  that  we  might  protect  our  rights ;  and  we  were 
denied  the  right  to  intervene,  and  an  appeal  from 
such  action  by  the  court  below  is  pending  here. 
In  behalf  of  the  holders  of  receivers'  certificates 
we  set  up  this  contract  and  filed  an  independent  bill,  and 
they  are  here  as  appellants  in  this  case.  That  bill  has 
not  yet  been  heard.  In  that  contract  there  is  a  pro- 
vision that  the  court  of  administration  shall  have  the 
right  to  appoint  a  director  of  this  Chicago  Railways 
Company.  The  other  directors  were,  as  I  have  said,  a 
majority  of  the  directors  of  our  company,  and  partici- 
pating in  it  were  the  attorneys  of  our  company,  who 
were  paid  by  our  money  and  the  receivers  appointed  by 
the  court  below.  The  court  appointed  a  director  of 
this  Chicago  Railways  Company  and  thereby  made 
itself,  as  we  contend,  and  we  have  now  established 
that  fact  upon  the  record,  a  party  to  this  contract.  We 
have  the  testimony  here  of  one  of  the  attorneys,  who 
has  been  paid  at  least  $18,000  a  year  from  the  proceeds 
and  earnings  of  this  property  during  the  period  of  ad- 
ministration, that  from  the  outset  the  court  was  ad- 
vised about  these  matters  and  had  all  of  them  under  his 
consideration  and  was  a  party  thereto. 


14 

It  is  established  here  that  the  genesis  of  this  contract 
is  probably  with  the  court  and  that  he  was  a  party  fa 
the  principles  and  the  purposes  of  this  contract  from 
the  beginning.  I  will  stop  now  to  read  a  little  testimony 
before  I  announce  a  principle  that  is  larger  1han  any 
principle  in  this  case  and  is  a  controlling  principle.  At 
page  386  of  Volume  3  of  this  record,  Mr.  Gurloy  testifies 
as  follows: 

1 '  Q.  When  was  the  first  time  you  had  any  knowl- 
edge with  regard  to  the  Chicago  Railways  Company 
being  selected  as  the  company  to  accept  this  new 
ordinance? 

A.  "Well,  I  knew  it  was  the  Chicago  Railways 
Company  or  some 'other  company  to  be  organized 
from  the  start." 

At  page  388  he  states : 

"I  was  counsel  at  that  time  for  the  receivers,  but 
it  is  true  also  that  during  all  the  time  of  that  ne- 
gotiation I  was  performing  the  same  work  for  those 
receivers  that  I  always  had,  and  I  never  received  a 
penny  of  compensation  from  the  receivers  or  any- 
body else  for  the  work. 

Q.  You  mean  for  the  work  with  regard  to  the 
Chicago  City  Railways  Company? 

A.  'With  regard  to  the  negotiations  for  that  ordi- 
nance. 

Mr.  CRAWFORD:     The  Railways  Company  I  mean. 

A.    Yes." 

On  page  390  Mr.  Gurley  says : 

"We  were  insistent  that  this  ordinance  should 
run  to  an  outside  company  absolutely  and  entirely, 
which  would  guarantee,  within  a  given  time,  to  ob- 
tain title  to  all  the  properties  then  operated  by  the 
receivers  of  the  Chicago  Union  Traction  Company. 
Mir.  Fisher  was  insistent  that  an  avenue  should  be 
left  open  by  way  of  a  reorganization  plan  tli at  should 
be  made  a  part  of  the  ordinance,  whereby  the  exist- 
ing interests  ultimately  would  be  recognized  accord- 
ing to  that  plan." 


15 

You  notice  that  this  contract  provided  that  no  one 
should  have  any  right,  by  reason  of  ownership,  whether 
a  stockholder  or  a  bondholder,  or  as  creditor  of  any  of 
these  companies,  in  the  Chicago  Railways  Company.  It 
seems  to  have  been  thought  that  it  was  not  a  matter  of 
right.  It  would  be  a  matter  of  grace.  See  if  we  have 
anything  as  a  matter  of  grace  according  to  Mr.  Gur ley's 
testimony. 

On  page  393  we  find  the  following: 

"Q.  Well,  the  only  pay. you  got  for  your  attend- 
ance before  the  transportation  committee  and  the 
people  in  New  York  was  your  regular  salary  in  be- 
half of  the  receivers'? 

A.  Never  got  any  pay  for  that  work.  I  got  a  reg- 
ular salary  from  the  receivers  and  I  did  exactly  the 
same  work  for  the  receivers  during  that  time  that 
I  did  before,  and  I  have  done  since,  and  I  had  to 
work  days,  nights  and  Sundays  to  get  it  done. 

Q.    And  your  expense  accounts  were  vouchered?" 

I  want  the  court  to  note  this:  *  *  *  "With  the 
understanding,  Mr.  Crawford,  however,  in  the  end  that 
all  those  items  of  every  kind  will  be  ultimately  paid  by 
the  Chicago  Railways  Company."  *  *  "There 
would  be  a  skeleton  copy  of  an  ordinance,  not  the  skele- 
ton copy  referred  to  this  morning,  and  many  amendments 
would  be  made,  many  changes  would  be  made,  and  then 
that  would  be  printed  again.  That  expense  was  borne  by 
the  receivers,  although  then  it  was  only  to  some  extent; 
that  is  the  Chicago  Railways  Company  paid  part  of  it, 
and  when  it  was  not  available,  as  a  matter  of  mere  ac- 
commodation the  receivers  paid  it,  but  with  the  under- 
standing always,  Mr.  Crawford,  that  ultimately  that 
matter  would  be  settled. ' '  In  other  words,  a  contract  by 
which  they  were  making  temporary  loans  to  the  Chicago 
Railways  Company,  which  was  taking  the  property  away 
from  its  owners  seems  to  have  been  in  force. 


16 

"Q.  Do  I  understand  that  there  was  al?o  an  un- 
derstanding that  the  Chicago  Railways  Company 
was  to  pay  you  for  your  services  in  connection  with 
that  matter? 

A.     Surely  there  was. 

Q.    What? 

A.     Surely  there  was. 

Q.  With  whom  of  the  Chicago  Railways  Com- 
pany? 

A.  *  *  *  Well,  with  Mr.  Govin  and  Mr.  Blair. 
I  certainly  intend,  if  the  Chicago  Railways  Company 
is  ever  organized,  to  put  in  a  claim  for  my  services. ' ' 

We  have  then  a  case  where  a  private  corporation  has 
been  organized  to  whom  a  gift  of  this  propeity  can  be 
made.  It  has  not  been  required,  as  is  the  ordinary  con- 
tractor in  a  simple  contract  with  any  ordinary  munici- 
pality, to  give  evidence  of  strength  by  bond  or  deposit. 
Its  capital  is  limited  to  $100,000,  and  that  by  a  provision 
put  in  at  a  late  date  in  this  plan  of  reorganization  is 
to  be  paid  by  the  money  belonging  to  this  trust;  and 
we  have  the  men  who  were  trustees  of  our 
property  in  the  corporation  in  which  we  hold 
stock,  assuming  relations  to  the  property  that  I  insist  are 
utterly  inconsistent  with  the  trust;  the  men  whom  we 
were  paying  to  look  after  that  interest,  relying  upon  the 
covenants  of  the  amended  lease,  which  had  been  forced 
upon  us  practically  by  the  court;  the  solicitors  whom 
we  had  been  paying  are  all  parties,  and  we  are  assured 
in  the  last  sentence  which  I  have  read  from  Mr.  Gurley's 
testimony  that  during  all  of  this  time  when  we  »vere  pay- 
ing even  the  cost  of  printing  the  ordinance  by  which  our 
property  was  to  be  taken  Mr.  Blair,  one  of  our  directors, 
was  arranging  with  Mr.  Gurley,  one  of  our  solicitors, 
that  when  this  property  was  given  over  to  the  Chicago 
Railways  Company  he,  Mr.  Blair,  as  an  officer  of  the 
Chicago  Railways  Company,  would  see  him  paid. 


17 

This  testimony  shows  that  during  this  period  when 
this  ordinance  in  the  name  of  the  Chicago  Railways  Com- 
pany was  being  negotiated  contrary  to  the  provisions 
upon  which  we  rely  in  this  amended  lease,  to  a  ^ew  com- 
pany, without  capital  and  without  credit,  by  our  paid 
agents,  that  the  court  employed  counsel,  also  paid  from 
our  funds,  to  assist  in  those  negotiations,  who  appeared 
constantly  before  the  transportation  committee,  and  as 
Mr.  Gurley  testifies  he  and  this  counsel  of  the  court  in- 
sisted that  the  ordinance  must  run  to  this  new  Company. 
I  do  not  need  to  call  attention  to  the  emphatic  language 
of  the  Supreme  Court  of  the  United  States  in  Michoud 
v.  Girod,  4th  Howard,  which  says  that  people  occupying 
these  relations  cannot  be  permitted  to  put  themselves  in 
such  relation  to  the  property  of  which  they  are  trustees ; 
nor  to  the  declaration  of  the  learned  and  eloquent  judge 
in  that  case,  that  the  courts  will  not  stop  to  investigate 
whether  or  not  the  transaction  is  fair;  whether  or  not 
it  is  for  the  interest  of  the  cestui  que  trust,  but  on  the 
well  established  grounds  of  public  policy,  without  inves- 
tigation, will  condemn  it  as  absolutely  void  and  fraud- 
ulent. 

Can  this  court,  I  ask  in  all  deference,  afford  to  say 
that  it  is  competent,  in  the  extended  exercise  of  the 
powers  of  a  chancellor,  to  create  a  corporation  to  whom 
he  shall  transfer  property  that  is  now  yielding  a  gross 
income  of  more  than  eleven  million  dollars,  with  only 
$100,000  capital  stock,  and  that  paid  with  our  money, 
employ  attorneys  to  bring  about  that  result;  have  the 
trustees,  upon  whom  we  have  relied,  participate  in  that 
organization  and  in  that  transfer,  and  likewise  the 
court's  receivers?  and  then  say  that  because  the  Chicago 
traction  question  ought  to  be  settled;  because  there  is  a 


18 

public  necessity  that  something  should  be  done  here  to 
get  better  public  service,  that  that  kind  of  conduct  will 
be  condoned,  and  that  kind  of  a  transaction  sustained? 
No  one  will  go  further  than  I  will  in  the  assertion  of  the 
powers  of  a  court  of  chancery;  no  one  has  more  elo- 
quently or  ably  stated  the  character  of  these 
powers  than  the  presiding  justice  in  the  court 
I  am  now  addressing;  but  I  submit  that  no  case 
can  be  found  in  the  books,  and  I  trust  no  case  will 
ever  be  made  by  this  court  that  will  say  that  ony  neces- 
sity relating  to  mere  property  interests  shall  override 
these  great  questions  of  public  policy  by  whicn  men  who 
are  trustees  remain  trustees  to  the  end;  men  who,  as 
solicitors,  directors  or  receivers,  have  duties  to  perform, 
must  remain  mindful  of  their  trust  duties  to  the  end ;  and 
I  say  that  it  would  be  better  that  every  dollar,  every 
piece  of  property  belonging  to  these  railroad  companies, 
should  go  as  Mr.  Gurley  said  in  his  argument  before 
the  arbitration,  they  were  in  danger  of  going,  to  the  junk 
heap ;  every  dollar  of  interest  of  my  clients  and  ail  these 
mortgagees  had  better  be  wiped  out  than  for  this  court  to 
say  that  it  is  competent  for  trustees  to  so  conduct  them- 
selves or  that  a  chancellor  can  properly  connect  himself 
with  such  a  scheme.  I  can  not  think  that  such  a  re- 
sult will  ever  be  reached. 

Now  it  may  be  said  that  everyone  has  an  opportunity 
to  come  in  here  and  participate.  I  deny  that.  There  is 
not  any  participation.  How?  Everyone  who  has  a  part 
in  the  litigation  or  is  interested  by  reason  of  ownership 
in  the  subject-matter  of  the  litigation  has  a  right  to  the 
exercise  of  judicial  powers.  I  do  not  understand  that 
the  Third  Article  of  the  Constitution  of  the  Government 
under  which  you  sit  gives  any  jurisdiction  except  with 
reference  to  controversies,  with  the  requisite  diversity 


19 

of  citizenship  and  other    subject-matters    that    are  de- 
scribed in  that  article. 

There  was  a  controversy  here,  then;  I  do  not  care 
whether  yon  consider  it  the  controversy  raised  by 
the  amended  and  supplemental  bill  of  the  Guaranty 
Trust  Company  or  whether  you  consider  it  the  contro- 
versy raised  by  this  creation  of  the  court  of 
administration,  the  Chicago  Railways  Company,  when  it 
filed  its  petition  to  have  this  property  turned  over  to  it; 
it  makes  no  difference  to  me,  for  the  principle  for  which 
I  am  contending  is  applicable  to  both  controversies ;  both 
the  amended  and  supplemental  bill  and  the  petition  of 
the  Chicago  Railways  Company  raised  issues  that  called 
for  the  exercise  of  judicial  powers.  Now  I  ask  'his  court, 
— and  this  is  another  branch  of  the  same  question,— 
whether  or  not  if,  as  Mr.  Gurley  testifies  and  this  rec- 
ord shows,  at  every  step  of  this  proceeding  the  court  of 
administration  was  a  party  to  the  proceeding,  if  he  had 
employed  counsel  for  the  purpose  of  bringing  about  this 
result,  if  he  was  constantly  advised  with  reference  to 
how  this  corporation  should  have  its  birth  and  how  it 
should  be  clothed,  whether  or  not  when  the  (jhicago  Rail- 
ways Company  filed  its  petition  to  turn  over  the  property 
of  all  these  companies  to  it,  and  was  opposed  by  all  these 
gentlemen  representing  the  trust  companies  and  the 
mortgagees,  by  us  as  stockholders,  whether  or  not  by 
reason  of  his  prior  relations  to  the  petitioner  he  had 
not  necessarily  pre-judged  the  cause?  If  he  had  organ- 
ized the  Chicago  Railways  Company,  if  he  had  author- 
ized his  receivers,  every  one  of  them,  to  become  parties 
to  it,  if  he  had  appointed  counsel  and  named  a  director 
for  it,  and  if  it  was  possessed  of  a  franchise  of  the  City 
of  Chicago,  through  the  efforts  of  himself  and  his  coun- 
sel and  the  other  paid  attorneys  for  this  trust,  was  he 


20 

not  a  party  to  the  Chicago  Railways  Company,  and  could 
he,  under  the  decisions  of  the  court  of  which  you  are  an 
honored  member,  the  Mioran-Dillingham  case  and  other 
cases  of  that  character — could  he  have  been  both  judge 
and  party!  I  say  he  disqualified  himself  as  a  judge,  and 
as  you  set  aside  the  judgment  of  Judge  Pardee  in  that 
case,  although  there  was  no  suggestion  of  impropriety 
except  the  mere  fact  that  he  had  been  related  to  the  con- 
troversy before,  I  believe  you  will  set  asi$e  this  order. 
I  submit  this  is  no  judgment,  because  the  court  was  so 
related  to  one  party  to  the  controversy  that  he  was  dis- 
qualified to  exercise  judicial  functions. 

But  that  is  not  all.  Preceding  this  was  the  question 
as  to  who  could  come  in  and  how — only  those  who  de- 
posited and  acceded  to  the  terms  of  this  plan  wrought  out 
under  such  circumstances  and  with  such  motives;  as  to 
us  and  other  stockholders  who  are  not  represented  by 
trustees,  unless  we  deposit  we  get  nothing,  and  we  are 
denied  the  right  to  become  parties  to  the  litigation  so  as 
to  protect  our  interests.  There  is  no  clause  in  any  of 
the  trust  deeds  that  authorizes  a  trustee  to  represent 
the  bondholders  in  any  such  contingency,  and  your  court 
has  held  that  you  are  to  look  to  the  terms  of  the  trust 
deed  to  ascertain  what  the  relations  of  the  trustees  and 
bondholders  are.  So  there  is  not  a  bondholder  before 
this  court,  in  any  proper  sense ;  but  they  cannot  partici- 
pate unless  they  deposit.  When  the  court  acted,  as  coun- 
sel in  the  organization  of  this  company — that  is  counsel 
by  consultation  with  him — and  sought,  through  having 
himself  named  arbitrator,  to  control  the  formation  of  the 
plan  which  as  judge  he  would  approve,  I  submit  that 
such  action  was  in  effect,  perhaps  not  in  the  letter,  a 
violation  of  the  federal  statute.  There  is  here  a  question 
of  public  policy  overshadowing  the  question  of  the  dispo- 


21 

sition  of  the  rights  of  the  parties  and  the  settlement  of 
the  relations  of  these  several  private  corporations  to  the 
city ;  and  you  cannot  affirm  this  judgment  unless  you  are 
prepared  to  say  that  it  is  competent  for  the  chancellor 
thus  to  relate  himself  to  private  enterprises ;  unless  you 
are  prepared  to  say  that  he  may  thus  participate  in  all 
these  pre-arrangements  looking  to  the  giving  away  of  the 
property  in  his  court  to  people  who  occupy  the  position 
of  trustees  and  to  the  exclusion,  without  judicial  sale,  of 
the  people  who,  in  the  exercise  of  their  judgment,  would 
rather  have  a  franchise  that  runs  until  the  city  has  pur- 
chased, that  cannot  be  terminated  until  the  city  has  given 
six  months'  notice  of  its  intention  to  purchase,  and  each 
party  has  appointed  an  appraiser,  and  the  two,  if  they 
disagree,  appoint  a  third,  and  the  city  pays,  in  cash,  at 
the  end  of  six  months,  before  entry,  the  total  amount  of 
the  value  of  the  property  as  thus  found. 

I  do  not  have  to  go  beyond  the  decisions  of  the  Su- 
preme Court  in  saying  that  trustees  and  solicitors  have 
no  right  to  deal  with  the  subject-matter  of  litigation  in 
that  way,  that  it  is  a  constructive  fraud — I  am  not  now 
saying  anything  about  actual  fraud — it  is  a  constructive 
fraud.  The  courts,  being  possessed  of  undisputed  evi- 
dence of  such  facts,  stop  right  there  and  say  that  it  is 
not  consistent  with  public  policy  that  such  conduct  should 
be  tolerated.  There  is  no  dispute  that  the  court  em- 
ployed counsel  who  participated  in  all  these  proceedings. 
So  that  it  must  be,  when  the  Chicago  Railways  petition 
was  filed,  that  the  judicial  response  to  that  petition  was 
known.  It  could  not  be  otherwise.  It  does  not  rest  upon 
statutes — this  principle  that  a  man  shall  not  be  a  judge 
in  his  own  case;  the  principle  that  a  man  shall  not, 
who  has  been  related  to  one  of  the  parties  or  participated 
in  the  subject-matter  of  a  controversy,  decide  that  con- 


22 

troversy.  And  how  insignificant,  I  submit,  is  the  ulti- 
mate outcome  of  these  questions  between  the  City  of  Chi- 
cago and  these  private  corporations,  charged  with  public 
duties  which  we  assume  the  city  is  able  to  make  them 
perform  and  which,  in  the  case  of  the  West  Chicago 
Street  Railroad  Company,  it  is  able  and  willing  to  per- 
form if  it  is  given  an  opportunity. 

The  court  will  recollect,  as  was  pointed  out  in  a  re- 
cent periodical,  that  de  Tocqueville,  seventv-five  years 
ago,  spoke  of  the  American  Bar  as  the  greatest  force  in 
the  American  commonwealth;  that  Mr.  Brice,  when  he 
wrote  his  work  upon  that  subject,  said  that  the  influence 
of  the  bar  was  declining.  It  was  said  that  heretofore 
lawyers  had  clients,  and  now  clients  have  lawyers,  and 
that  instead  of  clients  going  to  lawyers'  offices  for  con- 
sultation the  lawyers  go  to  the  corporations  or  the 
client's  office;  but  it  has  never  before  been  said  that 
v  clients  had  judges,  and  I  submit  that  when  this  Chicago 
Railways  Company  filed  that  petition  it  must  have  known 
—it  could  not  have  been  otherwise,  or  all  this  preparation 
and  expenditure  would  have  been  unnecessary — what  the 
judicial  response  to  that  petition  would  be.  On  the 
grounds  of  public  policy,  therefore,  the  order  of  the  court 
below  should  be  set  aside. 

Justice  BREWER  :  Assume,  for  the  purpose  of  my 
thought,  that  there  has  been  all  the  misconduct  that 
you  suggest,  that  a  decree  had  been  entered  and  an 
order  made  contemplating  the  rearrangement  and 
unifying  of  these  various  interests;  if  it  appears  to 
this  court  that  notwithstanding  that  conduct  the  in- 
terests of  all  the  parties  in  this  litigation  would  be 
promoted  by  having  the  scheme  of  reorganization 
carried  out,  would  it  be  just  or  right  for  this  court 
to  say,  "we  are  of  the  opinion  that  it  is  best  that 
such  a  reorganization  be  made,  but  we  won't  permit 


23 

it  because  of  the  misconduct  in  the  proceedings  of 
the  lower  court?" 

Mr.  ALDRICH:  I  answer  that  unhesitatingly,  yes. 
We  will  show  you  before  we  get  through  that  you 
cannot  say  that,  but  on  the  grounds  I  am  now  dis- 
cussing I  submit  that  the  general  esteem  in  which 
the  bar  and  the  judiciary  is  held  is  of  much  more 
importance  than  can  be  the  mere  ultimate  disposition 
of  property  rights. 

Justice  BREWER  :  Is  there  not  a  way  in  which  such 
misconduct  can  be  punished? 

Mr.  ALDRICH  :  There  is  not,  and  there  is  no  way 
to  protect  our  property  rights. 

Justice  BREWER:  I  put  it  upon  the  assumption 
that  the  reorganization  scheme  protects  your  rights. 

Mr.  ALDRICH  :  It  does  not  protect  our  rights.  I 
have  called  attention  to  the  fact  that  only  those  who 
have  deposited  their  stock  can  come  into  ihe  reor- 
ganization. We  have  not  deposited.  We  know  the 
money  is  ready  to  make  the  West  Chicago  and  its 
underlying  lines  as  successful  as  it  has  always  been 
in  the  past,  indeed  as  it  has  been  durina-  this  period. 
Its  franchises  have  not  expired.  The  broken  or 
dotted  lines  show  expired  franchises  on  the  North 
Side;  the  Union  Traction  interests  which  are  here 
protected  should  have  been  sacrificed,  and  we  would 
have  had  adequate  protection  in  our  franchise  rights 
r.nder  your  Cleveland  decision.  We  could  take 
hold,  or  these  companies  could,  through  the  stock- 
holders, and  arrange  with  the  City  of  Chicago,  as 
we  believe,  if  there  were  nobody  paid  by  oar  money, 
doing  as  Mr.  Gurley  said,  insisting  that  the  fran- 
chises should  run  to  some  new  company.  I  do  not 
believe  the  City  of  Chicago  has  any  desire  to  do 
injustice.  It  wants  service.  We  do  not  want  to 
come  into  this  arrangement;  we  cannot,  if  you  ap- 
prove the  gift  of  this  property ;  we  are  out  of  it,  and 
I  am  glad  to  trust  your  Honor's  decision  in  136th 
U.  S.,  that  notwithstanding  the  character  of  the 
service  with  which  these  corporations  are  charged, 
there  is  the  same  right  in  the  lien  as  there  would 
be  in  the  case  of  private  property ;  there  is  the  same 
right  in  our  stock  that  there  would  be  in  the  case 
of  private  property. 


24 

Your  Honors  have  not  forgotten  that  able  discussion 
by  the  Justices  of  the  Supreme  Court  of  New  Hampshire, 
where  the  State  of  New  Hampshire  attempted  to  buy 
the  Concord  Road  at  less  than  its  value,  under  an  amend- 
ment to  its  charter  provisions  in  that  respect,  and  where, 
citing  the  decisions  of  your  court  and  other  decisions, 
the  opinions  of  the  Justices  held  that  a  man's  property 
in  the  shape  of  corporate  stocks  or  bonds  is  just  as  sacred 
against  judicial  or  legislative  encroachment  as  his  farm 
or  city  residence.  You  have  repeatedly  said  the  same 
thing  in  applying  the  provisions  of  the  Fourteenth 
Amendment.  There  is  no  way,  I  submit,  except  through 
judicial  sale,  to  take  away  from  these  stockholders  and 
bondholders  their  rights. 

This  plan  was  arranged.  Nobody  saw  the  plan,  no- 
body had  an  opportunity  to  offer  any  other  plan  for  the 
court's  consideration;  he  did  not  ask  for  any  other  plan. 
Nobody  saw  it,  so  far  as  I  am  advised,  until  the  15th 
of  July,  or  within  a  few  days  after  it  was  carried  into 
a  judicial  decree.  As  long  as  the  receivers  of  the  court 
are  in  the  enjoyment  of  the  income  of  the  property  there 
cannot  be  a  default  of  these  mortgages;  and  if  the  true 
history  of  this  administration  is  ever  written  it  will 
be  shown  to  have  been  one  of  the  most  extravagant  and 
expensive  receiverships  that  has  ever  marked  the  judicial 
history  of  such  receiverships  in  the  United  States  courts. 
They  propose  to  give  away  fifty-five  per  cent,  of  the  net 
income  to  the  city  from  February  1st  last.  Necessarily 
the  bondholders  who  do  not  come  in  after  that  will  have 
no  provision  for  their  mortgages.  They  are  going  to 
compel  a  sale  under  those  circumstances,  and  they  have 
so  placed  themselves,  with  the  co-operation  of  the  court 
of  administration,  that  the  Chicago  Railways  Company 
is  the  only  possible  purchaser.  That  is  not  what  judi- 


25 

cial  sales  mean.  The  courts,  in  discussing  the  broad 
questions  of  public  policy,  have  heretofore  condemned 
any  sort  of  arrangement  looking  to  the  suppression  of 
bidding  at  public  sales.  If  in  the  ordinary  course  of 
judicial  administration  this  property  had  been  brought 
to  the  auction  block  by  receivers  who  were  receiving  the 
income  from  the  property,  there  would  have  been  an 
opportunity  for  others  to  prepare  plans  of  reorganiza- 
tion, for  others  to  come  forward  and  prepare  to  become 
purchasers  of  this  property;  but  if  it  is  going  to  be 
given  away  to  a  corporation  without  assets,  under  the 
circumstances  here  disclosed,  there  can  be  no  such  op- 
portunity. That  is  one  advantage  that  is  given  to  the 
Chicago  Railways  Company.  It  does  not  stop  there.  In 
this  arrangement,  contemplated  from  the  first,  by  which 
one  of  our  directors  was  making  contracts  with  our  so- 
licitor, the  chosen  man  at  the  head  of  the  legal  force  to 
guard  and  carry  out  the  provisions  of  the  amended  lease 
—when  we  come  to  a  reorganization  plan,  before  any 
other  of  these  people  can  participate  in  it,  we  find  there 
is  an  item  of  $1,969,000  set  aside  to  pay  among  other 
things  the  legal  expenses  and  expenses  of  organization. 

I  submit,  if  the  court  please,  from  these  considera- 
tions of  public  policy  there  should  be  no  approval  of 
this  plan,  and  that  you  cannot,  when  you  come  to  exam- 
ine it,  find  that  the  court  below  was  capable  of  doing  any 
judicial  act  with  reference  thereto  or  had  any  power 
to  thus  displace  vested  interests. 

It  has  been  arranged  that  Mr.  Crawford,  on  .our  side, 
will  reply  to  the  arguments  of  opposing  counsel.  This 
closes,  as  I  understand,  the  arguments  on  our  side  for 
the  present. 

1  thank  your  Honors  for  your  attention. 


,5 
T7A 


1907 
P,ftfct 


